Manufacturer Bradken has taken a massive hit to profit, but its shares are rising on its upbeat outlook for the year ahead.
The supplier of cast iron and steel products has worn the effects of a mining investment slowdown, but said orders for new work had improved recently and are expected to do so again later in 2014/15.
Less than three months after cutting about 500 jobs as part of a major restructure, chief executive Brian Hodges was optimistic about picking up contracts with mining companies who could not delay spending much longer.
But he flagged more job cuts ahead, with five foundries to close in favour of low cost operations in China, where it already has one facility.
Bradken shares gained 34 cents, or 7.9 per cent, to $4.66.
Its net profit fell 68 per cent to $21.5 million in the 2013/14 financial year, with sales revenue down in all of its divisions, including mining products, mineral processing, rail, and its US-based engineered products.
While miners may have pulled back on expansions and new mines, they will have to spend money to operate, Mr Hodges said.
"As delayed expenditure at mine sites is released and mine production volumes continue to increase that should support second half sales," he said.
"Those two things are happening and are real."
It is unclear when the mining capital investment cycle will improve, but Bradken is not solely reliant on the sector, Mr Hodges said.
The company is also well placed to take advantage of the recovery of global markets when future demand emerged, he said.
MINING INVESTMENT DOWNTURN HAMMERS BRADKEN'S PROFIT
* Full year net profit of $21.5m, down 68 pct from $66.9m in 2012/13
* Sales revenue of $1.14b, down 14 pct from $1.31b
* Final dividend of 11 cents, down from 18 cents
Share
